NY state auditors say Medicaid overpaid by $77M

ALBANY, N.Y. (AP) — New York nursing homes were overpaid $46 million from Medicaid while the program also overpaid $31 million for hospital care for patients who died within 24 hours of being admitted, according to state auditors.

The state runs the program. In reports issued publicly this week, the audits faulted the state Department of Health computer system for failing to deduct a portion of patients’ Social Security, pensions and other income sources from their cost of nursing home care and use a new payment calculation intended to be fairer to hospitals.

“Over and over again, my auditors are finding poor oversight of payments and other big problems that have led to tens of millions of dollars of waste in the Medicaid program each year,” Comptroller Thomas DiNapoli said Friday. The nursing home audit covered nearly four years ending in 2010, while a sample of 1,833 hospital inpatient claims were reviewed for almost three years through September 2012.

Health officials counter that under their ongoing Medicaid redesign, the budget has been held flat for two years, ending 13 percent annual growth, while adding coverage for 500,000 New Yorkers brought into the program by the recent recession and companies cutting employee insurance programs.

Medicaid, with a $54 billion budget of state and federal funds this year, provides health care to 5.3 million low-income New Yorkers.

The Office of Medicaid Inspector General has recovered $30 million of the nursing home overpayments and was expected to collect the other $16 million, according to the comptroller’s office. The Health Department said in-patient billing is being reviewed in a broader evaluation of the new, effective payment system that will be completed by Dec. 1.

Department spokesman Bill Schwarz said the comptroller’s report was flawed, failing to note a $220 million annual cost reduction for hospital inpatient services from the new system, while claiming $31 million in potential overpayments out of $10 billion spent, only a 0.31 percent error rate.